Crude oil remains a difficult market to be involved in, as the headline noise is almost constant here.
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Crude oil continues to be very noisy on Monday as headlines out of the Middle East of course cause chaos. After all, the Americans and the Iranians are supposedly not anywhere near making any type of an agreement and I think at this point a lot of traders are just simply getting exhausted with the narrative.
The narrative shifts every couple of minutes it seems and if that is in fact going to be the way this plays out, it's very difficult to get aggressive to the upside. After all, it's very difficult to put a huge position on when at any moment a random tweet or news story could send the oil in either direction.
The $100 Level as a Potential Magnet
It's worth noting that the $100 level was an area that offered a bit of resistance during the day and I think that is a story that we need to keep in the back of our mind. The $100 level of course is a large psychologically significant figure that a lot of people will pay attention to as it is good for headlines, and you could also make an argument that perhaps a lot of options traders will be involved there as well.
With that being the case, I think you have to look at this through the prism of a market that is now using the $100 level as a potential magnet for price. That makes sense because quite frankly, the market loves these big figures. If we do break to the upside, the $110 level gets targeted next followed by $120, but $120 has been almost impossible to break above up to this point.
If we break above $120, there is probably a very significant and disastrous headline in the news that has the entirety of the market worried about growth and of course supply. If we pull back from here, and that is a real possibility, then I think you see a lot of support near the 50-day EMA which is near the $92 level.
Overall, I believe this is a market that is more or less buy on the dip as far as its attitude, but I also recognize that at any moment the headlines can throw the market in either direction or as a result you have to be cautious with your position size.